The reader now goes to the Madras division in the Indian Empire, where Sir Michael O'Dowd commands Dobbin's regiment. Mrs. O'Dowd, kind, impetuous, and eager, tyrannizes her husband, bosses the ladies of the regiment, and mothers the young men. She decides Glorvina should marry Dobbin, who, of course, dreams only of Amelia.
When Amelia's letter of congratulation on his marriage to Glorvina comes, Dobbin despairs because he sees Amelia doesn't love him. Then, when he receives a letter from his sister telling him that Amelia may give up Georgy, as she is marrying the Reverend Mr. Binney, Dobbin rushes to Sir Michael and demands leave to return to England.
The scene moves to Great Gaunt Street, the location of the Crawleys' family house which is being renovated. Becky has originated the plan as part of her scheme to get into Vanity Fair. Becky has hinted to Sir Pitt that she and Rawdon need money, but he doesn't respond.
Little Rawdon has grown into a fine boy, generous and soft-hearted, but he has no affection for his mother. Her hatred toward him has destroyed his love. When the Rawdon Crawleys go to Queen's Crawley for Christmas, they are greeted cordially. Sir Pitt has improved the old home place and is repairing the popularity of the Crawleys by making friends in the area.
Becky, as usual, ingratiates herself with all who are important. She even courts the favor of Countess Southdown and shows affection to Mrs. Bute. Her attentions to Sir Pitt flatter him but make Lady Jane suspicious. Two incidents chill Lady Jane's feeling toward Becky. First, Little Rawdon says he always eats in the kitchen at home, and second, when his mother tries to show off by kissing him, he tells her she never kisses him at home. Rawdon appreciates Lady Jane's attention to his son. Little Rawdon enjoys the affection of all. When the vacation ends, Rawdon and his son are loath to leave, but Becky wants to return to London.
When Parliament opens and Sir Pitt comes to London, Rawdon and his son spend time with Lady Jane and the children, but Rebecca fawns on Sir Pitt and Lady Jane becomes more jealous.
Meanwhile Christmas at the Sedleys must be celebrated without much joy. They have no money. Georgy distinguishes himself with many honors at the Reverend Mr. Binney's school, and Amelia hopes he will be great and famous.
Miss Jane Osborne thinks often of little George. When she speaks up to her father at his question about her gold watch and chain, she defends herself by saying she bought it with her own money. The old man knows she has given it to Georgy and tells her to go buy herself another one.
The Dobbin sisters keep urging Amelia to let Georgy visit them, hoping thereby to reconcile him with his grandfather. Mr. Osborne finally offers to take Georgy on the condition he live entirely with his grandfather, seeing his mother only occasionally at her place. If such arrangements are made he will give Amelia an allowance. Furious, Amelia accuses the old man of trying to buy the child.
Credit becomes difficult for the Sedleys. No money comes from Joseph. All bills are due. Amelia has a quarrel with her parents over the use of her own money. Mrs. Sedley so browbeats Amelia that the latter gives up all her money to her parents.
Here is an example of the confusion possible in this narrative. The author has Georgy tell his mother that he has seen Sir William, and Mr. Dobbin, who have promised to show him the Tower of London. According to the previous narrative, Dobbin has just asked leave to return from Madras to London. He does not arrive, according to the account that follows, until Georgy has gone to his grandfather's place and is established in the Reverend Mr. Veal's school. Thackeray does not always keep time, place, sequence, and names in their proper places.
Dobbin measures Amelia's feeling for him by his thought on her letters "how cold, how kind, how hopeless, how selfish they were!"
Thackeray characterizes Peggy O'Dowd: "In a word, in adversity she was the best of comforters, in good fortune the most troublesome of friends; having a perfectly good opinion of herself always, and an indomitable resolution to have her own way." She has determined to get Glorvina a husband, and she will succeed. As for Glorvina, her great desire is to be admired, possibly the reason for her "forty or fifty previous defeats" in matrimonial endeavor.
Becky crawls up the social ladder with every opportunity. But her hatred for little Rawdon — she realizes his potential danger to her double life — begins to undermine Becky's relation with Lady Jane. Thackeray compares Becky's social climb under the eyes of knowing servants to a spider's efforts: "So you see Molly, the housemaid, of a morning, watching a spider in the doorpost lay his thread and laboriously crawl up it, until, tired of the sport, she raises her broom and sweeps away the thread and the artificer." The analogy foreshadows what will happen to Rebecca.
While Rebecca gains favor with Sir Pitt, and loses the confidence of Lady Jane, Rawdon gains Lady Jane's affection — leading eventually to Rebecca's catastrophe.
Amelia, the victim of her own soft heart and the crushing poverty that brings out the selfishness and senility of her parents, perceives that Georgy's welfare demands his transferal to his grandfather Osborne. The softening process in old Osborne, seen when he does not rave about Miss Jane's having given Georgy a watch, will continue rapidly when he has Georgy near him.
One of the few characters untouched by Vanity Fair is loyal Mr. Clapp, who remains faithful to the Sedleys, no matter what their financial condition.